The Best Starter Credit Cards of December 2020

The Best Starter Credit Cards of December 2020

These are the best cash back, no-fee and travel rewards cards for people new to credit.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

Citi is an advertising partner.

Chase Freedom®

Chase Freedom®

No Annual Fee

14.99% - 23.74% Variable

Excellent

  • Not currently available
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Discover it® Secured

Discover it® Secured

$0

24.49% Variable

New/Rebuilding

  • No Annual Fee, earn cash back, and build your credit with responsible use.
  • It's a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can't help you build a credit history.
  • Establish your credit line with your tax return by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
  • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
  • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
  • INTRO OFFER: We automatically match all the cash back you've earned at the end of your first year.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.
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Citi® Double Cash Card

  • On Citi's Secure Website

No Annual Fee

13.99% - 23.99% Variable

Excellent

  • Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
  • To earn cash back, pay at least the minimum due on time.
  • Balance Transfer Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% - 23.99%, based on your creditworthiness.
  • Balance Transfers do not earn cash back.
  • If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
  • There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.
  • The standard variable APR for Citi Flex Plan is 13.99% - 23.99% based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.
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1. Discover it® Cash Back

Why we like it: Discover's credit card offerings are designed for people new to credit. The Discover it® Cash Back is our top choice for starters, due to the card's excellent earning potential and added features that make it easy for first-time credit users: i.e., paying late won't raise your APR, there's $0 annual fee, foreign transaction fee, or overlimit fee, and you won't have to pay a fee after your first missed payment.

Apart from the user-friendly payment features, the Discover it® Cash Back is also excellent for its cash back rate. You'll earn 5% on categories that rotate each quarter on up to $1,500 in purchases. To get the 5% rate, you'll have to activate the categories each quarter online. In the past, these categories have included gas stations, grocery stores, popular pharmacy chains, Uber, Lyft and more. For 2020, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, Uber, Lyft and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target, and Walmart.com (October-December). For 2021, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, select streaming services and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target.com and Walmart.com (October-December).

Potential deal-breakers: You may not qualify for this card if you have bad credit or no credit history. However, people looking to rebuild credit can consider the Discover it® Secured, and students with limited credit history can apply for the Discover it® Student Cash Back.

2. Capital One QuicksilverOne Cash Rewards Credit Card

Why we like it: The Capital One QuicksilverOne Cash Rewards Credit Card is a cash back card designed for people with limited to fair credit. For a $39 annual fee, you'll earn 1.5% Cash Back on every purchase, every day. There are other cards that earn 1.5% Cash Back on every purchase, every day without an annual fee—e.g., the Chase Freedom Unlimited® and Capital One Quicksilver Cash Rewards Credit Card—but you're more likely to get approved for the Capital One QuicksilverOne Cash Rewards Credit Card if you're new to credit.

Potential deal-breakers: You may be hesitant to apply for the Capital One QuicksilverOne Cash Rewards Credit Card since the card has an annual fee. However, once your credit improves you may be eligible to upgrade your card to the no-fee Capital One Quicksilver Cash Rewards Credit Card. If you're against paying an annual fee in general and you have limited credit, you may need to settle for a card without rewards, like the Capital One Platinum Credit Card.

3. Discover it® Student Cash Back

Why we like it: The Discover it® Student Cash Back has the same earning structure as the Discover it® Cash Back; the key difference is that the card is geared toward students. With the Discover it® Student Cash Back , Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.. 2020 categories include: grocery stores, Walgreens and CVS (January-March), gas stations, Uber, Lyft and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target and Walmart.com (October-December). For 2021, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, select streaming services and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target.com and Walmart.com (October-December).

The sign-up bonus on the Discover it® Student Cash Back is excellent: at the end of your first year with the card, Discover will match all of the cash back you've earned. If you max out the 5% category each quarter, you'll get at least $300 for your welcome bonus.

Potential deal-breakers: If you're a high spender—or your spending doesn't fit within this card's bonus categories—the Discover it® Student Cash Back may not be your best option. You may be able to get more value from a card without a limit on rewards, like the Chase Freedom Unlimited®, which earns 1.5% back on all purchases. In most cases, the Discover it® Student Cash Back is an excellent first credit card for students.

4. Chase Freedom Unlimited®

  • On Chase's Secure Website
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Why we like it: The Chase Freedom Unlimited® is a solid entry-level credit card, especially if you plan on getting into the world of travel credit cards and rewards. The card lets you Earn 5% cash back on travel purchased through Chase, 3% on dining and drugstores, and 1.5% on all other purchases. And, there is no cap on rewards and no annual fee.

One of the best parts of this card is that when paired with the Chase Sapphire Preferred® Card or Chase Sapphire Reserve® you can transfer your points to travel partners in the Chase Ultimate Rewards program. These include JetBlue, Southwest, United and Marriott. When redeemed for travel on the Chase portal, your points will be worth 1.25 cents with the Chase Sapphire Preferred® Card and 1.5 cents with Chase Sapphire Reserve®. If you don't have one of the Sapphire cards, the points earned with your Chase Freedom Unlimited® are worth 1 cent each.

Potential deal-breakers: If you don't have some credit history or an existing banking relationship with Chase, you may not qualify for the Chase Freedom Unlimited® as your first credit card. If this is the case, consider the Discover it® Cash Back as your first card. After six months to a year of responsible credit management, you'll likely be approved for the Chase Freedom Unlimited®.

5. Chase Freedom®

Why we like it: The Chase Freedom® is another rotating category cash back card. The Chase Freedom® Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.

In addition, the Chase Freedom® can be paired with the Chase Sapphire Preferred® Card and Chase Sapphire Reserve® if you want to transfer your points to Chase's travel partners. Those cards have annual fees and require a more established credit history, so you can consider opening one of them once you've had the Chase Freedom® for a few months.

Potential deal-breakers: You won't have much use for the Chase Freedom® if you don't typically spend in any of the bonus categories. However, most people should have no trouble finding value in this card, as the bonus categories are usually in popular spending areas. In the past, the categories have included department stores, gas stations, grocery stores, home improvement stores, mobile wallet purchases, restaurants, wholesale clubs and more.

6. Discover it® Secured

Why we like it: Secured cards are a good option for people with no credit history. With a secured card, you put down a security deposit and are given a credit line equal to that deposit. These types of cards are usually used to build credit and don't offer spending rewards. However, the Discover it® Secured is our favorite secured credit card, because it comes with a rewards program—2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically.

Potential deal-breakers: You only need to apply for a secured card if you have no credit history. It's likely that you'll qualify for the regular version of this card if you already have a student credit card or some credit history from taking out a student loan.

7. Citi® Double Cash Card – 18 month BT offer

  • On Citibank's Secure Website
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Why we like it: The Citi® Double Cash Card – 18 month BT offer is one of our favorite cash back credit cards without an annual fee. Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. This is a great card for people who don't want to worry about activating rotating categories and whether or not a purchase qualifies for a certain cash back rate.

Potential deal-breakers: If you don't have any credit history, consider getting a secured card before applying for the Citi® Double Cash Card – 18 month BT offer. In addition, frequent international travelers may want to consider a starter card that waives foreign transaction fees, like the Chase Freedom® or Chase Freedom Unlimited®. Otherwise, this is an all-around great starter card for people who qualify for it.

8. Secured Mastercard® from Capital One

Why we like it: Behind the Discover it® Secured, the Secured Mastercard® from Capital One is our second favorite secured card for people new to credit. It doesn't offer a rewards program, but it does give you the opportunity to get a credit line that's higher than the security deposit you put down. The card currently offers a refundable minimum security deposit of $49, $99 or $200 (note, you’ll need access to an authorized bank account to make your security deposit).

Potential deal-breakers: Keep in mind that this secured card is geared toward people who are rebuilding their credit. As such, this is an excellent choice if you've made a mistake paying an auto loan in the past and you don't have any credit card accounts that demonstrate responsible credit management. If you're new to credit but don't have any negative marks on your credit file, you'll probably be able to qualify for one of the unsecured cards on this list.

9. Capital One Platinum Credit Card

Why we like it: The Capital One Platinum Credit Card is a worthwhile option if you have zero credit history or have made some credit mistakes in the past. The card doesn't earn any rewards, so the only reason to apply for it is to build or rebuild your credit. The card has a $0 annual fee, and you'll be able to access a higher credit limit when you make your first five payments on time.

Potential deal-breakers: As mentioned above, the sole purpose of the Capital One Platinum Credit Card is to help you build or rebuild credit. If you have a decent amount of credit history from other financial products and are looking to get a starter credit card, we suggest that you look at other options. A cash back card like the Discover it® Cash Back or the Chase Freedom Unlimited® will provide much more value in the long term.

Summary of the Best Starter Credit Cards

Should You Get a Credit Card?

Pros

  • Getting your first credit card is an important step toward building credit
  • Paying your credit card bills on time and in full will set you up to qualify for low interest rates on loans in the future
  • Certain credit cards offer cash back rewards on your spending and even perks like airport lounge access and free hotel nights

Cons

  • Some entry-level credit cards have an annual fee and no rewards program
  • Interest charges can be expensive if you don't pay your bill in full
  • Missing a payment due date can significantly damage your credit score

Opening a credit card is an exciting and crucial part of your journey toward financial health. By establishing good financial habits and paying your credit card bills on time, you'll be on the road toward loan approvals and low interest rates. But first, you need to decide what type of credit card best fits your current needs. For most people, we suggest a simple cash back card that earns 1% to 2% on every purchase.

There are a few cases where you should wait to apply for a credit card. If you don't have a stable income stream, for example, you may want to hold off on applying for credit until you can reliably pay off your purchases. Alternatively, if you have a history of being late with your bills or overdrawing your checking account, you may want to practice responsible financial management with your debit card and checking account first.

One of the key components of having a high credit score is the average age of your accounts, so it's important to pick a credit card that you'll be happy to have in your wallet for a long time. This is why it's best that your first credit card is something with no annual fee: if you want to put your expenses on a different card in the future, you can stop using your first credit card without having to cancel it (canceling an older card can decrease your score).

How to Choose a First Credit Card

Credit cards come in two main forms: rewards cards and non-rewards cards. If you can pay your bill in full and on time every month, we suggest that you choose a rewards card. On the other hand, if you have a history of being late with your bills or missing payments, we suggest you choose a card without rewards that will help you build credit. Cash back and other rewards can be a great way to make a little money on your regular purchases, but cash back cards also tend to charge much higher interest rates.

The Best Credit Card for a First Time Applicant

If you can responsibly manage a line of credit, we suggest that your first credit card is a card that earns rewards, like the Discover it® Cash Back, Chase Freedom® or Chase Freedom Unlimited®. If your credit is damaged and you need to rebuild it by opening a new line of credit, the best move is to apply for a secured card such as the Discover it® Secured or Secured Mastercard® from Capital One.

What Is the Minimum Age Required to Apply for a Credit Card?

You can apply for a credit card on your own at the age of 21. If you're between 18 and 21 years old, you'll need a parent or guardian to co-sign your credit card application. However, if you have a stable source of income and are under 21, you can submit pay stubs with your application to prove you have financial independence and the ability to pay off your credit card bills. Otherwise, you may need to open a secured card.

Do I Have a Credit Score?

Most consumers have a credit score, even if they don't have a credit card. This is because all types of loan products are factored into your score, including student loans and auto loans. In addition, some calculations of your FICO score take into account phone and electric bill payments for consumers who don't have large credit files. You can check your credit score by using a free service like Credit Karma, Mint or LendingTree, our parent company.

Can I Get a Credit Card with No Credit History?

It's definitely possible to get a credit card if you don't have previous credit history. Your best bet is to apply for a secured card, which requires you to put down a security deposit that serves as your credit limit. If you're a student, we'd suggest opening a student card, like the Discover it® Student Cash Back. Once you've established credit history with a secured or student card, you can move on to a cash back, rewards or travel credit card.

The information related to the Chase Freedom® has been independently collected by ValuePenguin and have not been reviewed or provided by the issuer of this card prior to publication.

Yowana is a former product analyst at ValuePenguin, specializing in credit cards, rewards programs and travel. He previously covered mortgages, banking and insurance for the website. Yowana graduated from Columbia University with a B.A. in Political Science.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The products that appear on this site may be from companies from which ValuePenguin receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). ValuePenguin does not include all financial institutions or all products offered available in the marketplace.

How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).